Whether portable units are exempt supplies of accommodation in a dwelling

1. The Taxpayer rents portable self-contained units to its customers under a hire
   agreement. The units are delivered to, and installed on, the customer’s property.
2. Under the hire agreement, the customer agrees that the unit will not be moved once it
   is installed. The portable unit remains a relocatable chattel and does not constitute a
   fixture or improvement on the land. The Taxpayer has the right to terminate the hire
   agreement and remove a portable unit if the terms of the agreement are breached.
3. Hire fees are paid weekly in advance. The hire agreement serves as the basis for the
   weekly payments, but a systems-generated invoice is raised each week for accounting
   reference and issued to the client on request.
4. The portable units typically serve as an extension to the customer’s existing property.
   The portable units may be used as residential accommodation or commercial (office)
   premises. Where the purpose of the hire is not residential, GST is charged on the hire.
5. The delivery and site installation is charged with GST. The Taxpayer did not dispute
   that the delivery and installation fees are subject to GST.
6. The Taxpayer filed a GST return for the disputed period, returning GST on the hire of
   units for residential use. However, the Taxpayer subsequently issued a Notice of
   Proposed Adjustment proposing that this supply should be exempt, and therefore,
   should be entitled to a refund.
7. The main issues considered in this dispute were:
   ▪ whether the hire of the portable units was a single supply or multiple supplies;
   and
   ▪ whether there was an exempt supply of residential accommodation.
8. The Tax Counsel Office (TCO) decided that:
   ▪ The supply of portable units under the hire agreement consists of multiple
   separate supplies. These supplies include a series of successive supplies of the
   hire of the portable units, deemed to occur under s 9(3)(a), and a separate supply
   of delivery and installation of the portable units.
   ▪ The series of successive supplies of the portable units are not exempt supplies of
   “accommodation in a dwelling” under s 14(1)(c). The Taxpayer is therefore liable
   for GST on the supplies.

Source: govt.nz